Performance Improvement Paths in the U.S. Airline Industry:Linking Trade‐offs to Asset Frontiers

Abstract

Several articles have been written during the past few years examining performance improvement paths and various forms of efficiency frontiers in operations strategy. These articles focus primarily on defining and describing these frontiers and raise questions concerning how to improve operations. In this paper, we provide one of the first empirical studies aimed at validating these earlier studies. Using a database on the 10 largest U.S. airlines for a period of 11 years, we test and validate some of the models presented in the operations literature. The 10 major airlines are separated into 2 groups for analysis: geographic specialists and geographic generalists. Our analysis shows that better performing airlines (in terms of cost‐quality position) in both groups confirm the predictions of the sand cone model when operating further away from their asset frontiers, although trade‐offs do occur when operating close to asset frontiers.

OM Forum—Causal Inference Models in Operations Management

“…Song et al (2015) use a DID model to show that a dedicated queuing system reduces waiting time relative to a pooled queuing system. On issues related to operations strategy, empirical researchers have examined how various strategies affect operational performance (see Stratman 2007, Lapré and Scudder 2004, Tsikriktsis 2007, Rawley and Simcoe 2010, Kroes et al 2012. In particular, Rawley and Simcoe (2010) investigate whether firm diversification leads to increased outsourcing.…”

Zero-sum and frontier trade-offs: an investigation on compromises and compatibilities amongst manufacturing capabilities

“…(Ferdows and de Meyer, 1990;Miller, 1990, 1992;Noble, 1995;Schroeder et al, 1996;Mapes et al, 1997;Morita and Flynn, 1997;Szwejczewski et al, 1997;Fillipini et al, 1998;Collins et al, 1998;Flynn et al, 1999;Fynes at al, 2000;Mapes et al, 2000;Safizadeh et al, 2000;Dostaler, 2000Dostaler, , 2001; da Corbett and Whybark, 2001;Corbett and Claridge, 2002;Stratton and Warburton, 2003;Lapre and Scudder, 2004;Rosenzweig and Roth, 2004;Flynn and Flynn, 2004;Narasimhan et al, 2005;Fynes et al, 2005;da Silveira, 2005;da Silveira, 2006;Grobler and Grubner, 2006;Squire et al, 2006;Swink et al, 2006;Stratton and Warburton, 2006;Sarmiento et al, 2007;Antonio et al, 2007;Sarmiento et al, 2009). …”

Operational hedging against adverse circumstances⋆

“…Fourth, Lapre and Scudder (2004) examine differences in performance improvement paths between global operations and geographical specialists in the airline industry. Allayannis et al (2001) use geographic dispersion as a proxy for operational hedging, where international activity is assumed to mitigate risks.…”